So their startup dream ends up becoming a retread, a wanna-be, just another player in a trendy game of whatever is hot this quarter.
This mistake is not a weakness of ego, inexperience, or greed. It’s actually more of a well-intentioned slip, one that leads an entrepreneur to go from leaning on a metaphor to explain what they’re trying to accomplish to falling into a trap of their own making and actually living that metaphor.
I’ve been building companies a long time, and it took me too much of that time to realize the value of mission and positioning. I thought they were just buzzwords. I was wrong.
Let’s use those lessons to keep you out of that trap.
Trends rise up when something traditionally difficult suddenly becomes easy
Damn, but there are a lot of two-sided marketplace startups everywhere.
I’ve been building 2SMs in one form or another since I first started my own company some 20 years ago. Back then, I didn’t even set out to build a marketplace, it just naturally formed around my original idea. It was very successful, so I built another one, then another one.
I learned lesson after lesson and made mistake after mistake. But as time wore on and technology got better, the building part got easier and easier. I didn’t have to build my own eCommerce engine anymore, then I stopped having to ask the customer for their location, and now I’m about to embark on a new 2SM that I should be able to get into MVP without having to write a single line of code.
So now that it’s become much easier to stand up a two-sided marketplace, it’s no shocker that 2SMs are springing up everywhere — transacting all kinds of niche services for all sorts of vendors across a multitude of markets. In fact, I recently talked to two colleagues in the investment and accelerator spaces, and each told me, independently, that almost half of their inbound was from entrepreneurs building some form of two-sided marketplace.
But what hasn’t gotten easier is the correct approach to the viability of the 2SM platform’s business model.
Even with my decades of experience standing up 2SMs for myself and others, as recently as four months ago I was writing posts like Does the World Need Another Two-Sided Marketplace?
OK, Hypocrite!
You may have caught that I’m writing posts raging against the need for more 2SMs while also dropping hints that I’m getting ready to unleash another one myself.
It’s not what it looks like.
That’s because, in some sense, the proliferation of 2SMs as a startup trend actually makes it a good time to build a 2SM. As someone who built his first 2SM in Classic ASP, I will state again, emphatically, that shit got real easy real quick. I’m not kidding about the fact that I can get to at least MVP and probably farther writing no more than some JavaScript.
But also, the first 2SM I built was misunderstood by everyone who came into contact with over its first year of existence — including vendors, customers, and investors. No one knew what it was. I couldn’t call my first startup an “Uber for Writers” because there was no Uber.
I’ve actually never called my new 2SM “Uber for Advisors” because, as I’ve matured as an entrepreneur, I’ve learned that mission and positioning should come FIRST, not later, and so I’m positioning this startup as the first of its own kind, both in the way I talk about it and, more importantly, the way it's built.
So yeah, it’s a 2SM, but it’s not.
Your mission should lead you to build something completely different
There’s no denying that entrepreneurs need comparisons to explain their new and innovative idea in a way that will get people to understand it quickly, especially customers and investors. So leaning on the crutch of “Uber for X” or “Netflix for Y” is almost mandatory — in the beginning.
And there’s absolutely nothing wrong with integrating new and hot technology or business model into the infrastructure of your company or your product. With all the untold damage that COVID-19 has done to brick-and-mortar retail and the service industry, 2SMs aren’t a fad, they’re here to stay.
But your mission should never be to ride someone else’s model with a slightly different twist. When you start conforming to look more and more like the incumbent for the sake of siphoning some of the revenue they’re leaving on the table, you’ll wind up boxing yourself into a corner that you can’t get out of.
The incumbent will fix their oversight, and if their brand recognition or marketing dollars don’t take you out immediately, they’ll come after you later.
The “slightly different twist” in your model should actually be a huge difference in mission. If my take on my new 2SM was to just connect people who need advice with people who can advise, it would be a colossal failure. While I can’t tell you what the difference in mission is until I actually launch the thing, I can tell you that difference is pronounced and easily explainable in three short words, all of those words are less than seven letters.
Your positioning should lead you to sell something completely different
I just spent a week with my full-time startup, Precision Fermentation, discussing positioning with the leadership team and making sure we’re all on our way to the same page about just what it is we’re selling.
Back to Uber again. Why isn’t Uber known as a “taxi in a mobile app”? Because Uber actually doesn’t sell rides. Taxi companies sell rides. Uber sells mobility, and in some sense they sell freedom.
Uber sells the concept that no matter where you are and where you need to go and how much cash you have on you at the time, or for that matter, what time it is, you can be reasonably sure that you can get from point A to point B with very little hassle.
Uber didn’t explode because Taxis suck (although they kinda do), or because Taxis are expensive (although they kinda are). Uber saw growth vectors converging to an urban centre that could sustain a completely different mobility model. They positioned themselves as purveyors of that new definition of mobility. And, Lyft notwithstanding, they won.
Uber could have just been a “taxi in a mobile app.” At the very beginning of their life, they actually were just that. And at this late stage, the taxi model — with its W2 employee requirements and unions and licensing and whatnot — would have come with far fewer headaches.
But then, very quickly into Uber’s growth cycle, they would have become just another “taxi in a mobile app,” surrounded by clones, until they became just another clone.
For better or for worse, positioning made Uber what it is today.
There’s a lot less appetite for betting on a single winner
Before COVID, there was a huge problem with ridiculous VC-backed private company valuations leading to shitty IPOs. That problem still exists. After COVID, there will be far less chance that pre-revenue and pre-profit startups get funded at those heights based on a single winner coming out of a trendy model battle.
We’re going back 10–15 years in the VC cycle, in a good way.
At the same time, it’s never been easier to get paying customers for an innovative idea. Low-code and no-code options keep shrinking the competitive moats around technology innovation. The name of the game is very swiftly turning into value over hype.
Startups should be thinking in smaller numbers, smaller investments, shorter milestones, longer timelines. Because if everyone has access to the technology, the winners are going to be the ones with experiential knowledge.
That kind of knowledge comes from making mistakes, learning lessons, seeing problems before others do, and solving those problems. That kind of execution starts with getting off the startup trend bandwagon and starting a trend of your own.
This article was originally published on Medium by Joe Procopio
Joe Procopio is a multi-exit, multi-failure entrepreneur. He is currently the Chief Product Officer at Spiffy, on-demand vehicle care and maintenance startup. In 2015, he sold Automated Insights to Vista Equity Partners. In 2013, he sold ExitEvent to Capitol Broadcasting. Before that, he built Intrepid Media, the first social network for writers. You can read more and sign up for his newsletter at www.joeprocopio.com
